"Air Canada Rides Out Stormy Weather", WSJ October 28, 2002.
"Air Canada this summer started four niche airlines: Tango (a low-cost, low-fare national carrier), Zip (a low-fare carrier in Western Canada) ... [and is considering niches focused on] cargo service and business travel." (See also Air Canada Vacations and Jetz -- the new business travel-oriented subbrand.) What do you make of this "subbrand strategy"?
Demand issues: Is flying Tango substantially different than flying on a standard flight with a cheap, restricted ticket? What about flying Jetz vs. on a standard flight in business class?
Cost issues: Are cost advantages to segment-specialization great enough that we can ever expect airlines to totally specialize in this way (for all of their flights)? In particular: who is more vulnerable to entry, an airline that carries several types of passengers on several flights or one that carries only a single type of passenger on each flight?
Price Discrimination Issues: Does Tango need to require advance purchase and a Saturday night stay to segment the market of business travellers from leisure travellers? (One can argue this both ways: What facts could we learn to decide the issue?)
[Categories: Airlines, Demand, Market Definition, Price Discrimination]
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